Sterling rose in European trade for the fourth straight session again yen, hitting seven-month highs after trespassing 170 yen on prospects of a widening policy gap between the UK and Japan. 

Bank of Japan is expected to increase interest rates by 25 basis points next week, while Bank of Japan has ruled out rate hikes in the forseeable future. 

GBP/JPY rose 0.7% to 172.09, the highest since October 2022, with a session-low at 170.93, after spiking 2.25% on Friday, the third profit in a row and the largest since October 2022 after Bank of Japan's meeting. 

Bank of Japan 

Recent US consumer prices and wages data show that inflationary pressures remain strong and there's a need for upcoming interest rates hikes following the expected May's 0.25% hike. 

Bank of England Governor Andrew Bailey said there might be a need for more UK rate hikes if signs of inflationary pressures insisted. 

Deutsche Bank raised its estimates for peak UK interest rates from 4.25% to 4.75%, which it means it expected an additional 0.25% hike following the May one. 

Bank of Japan 

Bank of Japan at its first meeting under new governor Kazuo Ueda maintained interest rates at the record low of minus 0.1%.

The BoJ also decided to maintain targets for 10-year treasury yields at zero, and overall maintaining policies unchanged to support economic recovery in the country.

The BoJ decided to conduct large-scale reviews for monetary easing measures in the next year.

The bank said that achieving price stability has proved challenging for the past 25 years, and that monetary easing policies impacted a wide sector of the economy and the financial sector.

The BoJ decided to remove future directives and pledges to maintain rates at current levels, while asserting it'll keep expanding the monetary base until consumer prices reach the 2% target.

Gold prices declined in European trade on Monday, resuming losses with prices moving in a negative zone again, almost hitting multi-week lows as dollar muscles up against rivals. 

Dollar's gains come ahead of the crucial Federal Reserve's policy meeting tomorrow, with decisions issued on Wednesday, expected to raise interest rates by 25 basis points. 

Prices Today

Gold prices fell over 0.6% to $1,977.63 an ounce, after rising 0.1% on Friday, the first profit in three sessions off two-week lows at $1,969.22 an ounce. 

Gold prices rose 1.1% in April, hitting 13-month highs at $2,048 an ounce as dollar lost ground. 

The Dollar

The dollar index rose over 0.2% on Friday, extending gains for the third session against a basket of major rivals and pressuring gold prices. 

Dollar is receiving increased alternative investment demand after data showed Chinese factory activities shrank unexpectedly in April.

The Fed

The Federal Reserve is convening to decide on monetary policy on Wednesday, with markets expecting a 0.25% rate hike.

Most remarks by Fed officials were rather bullish and pointed to increased pressure from inflation in the US and the need for another rate hike.

US Rates

Current pricing for a 0.25% Fed rate hike this week stands at 87%. 

The SPDR 

Gold holdings at the SPDR Gold Trust remained flat on Friday at 926.28 tones, the lowest since April 21. 

Gold prices lost ground as the dollar advanced against most major rivals following economic data. 

Inflation

US core personal spending rose 4.6% in March, slowing down from 4.7%.

The Federal Reserve will hold its periodic policy meeting next week to decide on policies, and it's expected to raise interest rates by 25 basis points.

Corporate Results

Corporations on Wall Street continue to report quarterly results in the first quarter of 2023.

Microsoft, Alphabet, Amazon, Intel, and Tesla all reported quarterly results, beating expectations.

Otherwise, the dollar index rose 0.1% as of 21:02 GMT to 101.6, with a session-high at 102.1, and a low at 101.4. 

Gold spot prices fell 0.1% to $1,997.2 an ounce as of 21:03 GMT. 

Most US stock indices rose on Friday as markets assess latest quarterly financial results by corporations and latest US data.

Inflation

US core personal spending rose 4.6% in March, slowing down from 4.7%. 

The Federal Reserve will hold its periodic policy meeting next week to decide on policies, and it's expected to raise interest rates by 25 basis points. 

Corporate Results 

Corporations on Wall Street continue to report quarterly results in the first quarter of 2023. 

Microsoft, Alphabet, Amazon, Intel, and Tesla all reported quarterly results, beating expectations. 

On trading, Dow Jones rose 0.4%, or 130 points to 33,957, while S&P 500 climbed 0.3%, or 14 points to 4,149, as NASDAQ stabilized at 12,141.